Civil Service Pension - better to go part-time or partially retire?

Qwerty_peardrop

Hello,

Looking for some advice about my Civil Service Pension about whether it's better to go part-time or to partially retire and the impact on my pension for each option.

I am considering reducing my hours by a day a week and don't particularly need to make up my pay with pension. I am 59 this year on 6th December.

I was in Classic scheme from 1992 to 31/3/2022 if i use McCloud figures, with 28 years 359 days reckonable service and then in Alpha since 01/04/2022 with 4 years service to date.

I know that if I partially retire at age 59 I will lose 5% of my classic for taking it 1 year early. Do i also need to take Alpha or can I leave that untouched?

I know that the Classic uses the best of the last 3 years salary, is this 3 years immediately prior to retirement date? What is the difference on impact of this between partially retiring and going part time? Or is there no difference? And as long as i fully retire within 3 years what salary would it be based on?

As we no longer contribute to Classic the figures I have previously seen on the calculator we used to have access to where you could adjust age taken at, would me reducing a day greatly impact those figures?

I intend to fully retire within 3 years of going part time, which would make me 61ish, I know I would have a penalty for taking Alpha early at that point.

Any advice appreciated as I'm not sure where else to go for it or do you know if some financial advisers would be able to give advice on this?

Thank you.

Isthisforreal99

You do not need to take Alpha if you partially retire, you can take Classic only.

One thing to note is that if you continue working past 60 and do not take Classic at 60 by partially retiring you effectively 'lose' any Classic payable between 60 and the date you partially or fully retire.

Vitor

Personally, I would ask Civil Service Pensions/employer pensions for two or three formal illustrations: four days with no pension, partial retirement at 59 taking Classic only, and waiting until 60/61. I would not rely on a generic financial adviser unless they have specific Civil Service Pension experience, as this is more a scheme-rules question than an investment-advice question.

Partial retirement is useful where someone needs to replace lost salary, but if you do not need that income, the case for taking an actuarial hit is much weaker. I wouldn't stay a day after 60!

Isthisforreal99

https://forums.moneysavingexpert.com/discussion/comment/82064327#Comment_82064327

Meanwhile back on planet earth.......

There is no such luxury with CS pensions of requesting such a range of scenarios and without a working modellor it's very much a case of work it out for yourself.

Not that it's rocket science.

hugheskevi

I know that if I partially retire at age 59 I will lose 5% of my classic for taking it 1 year early. Do i also need to take Alpha or can I leave that untouched?

If you partially retire, you make an irrevocable 2015 Remedy decision, but can then do whatever you like with the classic and alpha pensions - taking some, all, or none of each one independently.

I know that the Classic uses the best of the last 3 years salary, is this 3 years immediately prior to retirement date? What is the difference on impact of this between partially retiring and going part time? Or is there no difference? And as long as i fully retire within 3 years what salary would it be based on?

The last 3 years as at the date you commence your classic pension, or leave the classic scheme with deferred benefits if earlier.

If you partially retire you use the 3 years prior to the date of partial retirement. If you go part-time and do not claim pension, the full-time equivalent salary is used to calculate classic benefits and the 3 years to date of whenever you commence the pension or leave the scheme is used for calculations.

As we no longer contribute to Classic the figures I have previously seen on the calculator we used to have access to where you could adjust age taken at, would me reducing a day greatly impact those figures?

Do not rely on calculator figures, especially old ones. Look at your latest Annual Benefit Statement in the pension portal, which will show you the unreduced classic amount due at 60 (you will need to tweak for latest pay, and the amount of pensionable income you will have in the 12 months to the date of partial retirement). There are calculators on the website to show the effect of taking it early. Note that your 2026 Annual Benefit Statement is due by 31st August.

I intend to fully retire within 3 years of going part time, which would make me 61ish, I know I would have a penalty for taking Alpha early at that point.

You would almost certainly want to either take your classic pension at age 60 (most likely), else switch to Partnership just before age 60. That will ensure you do not lose classic pension due between and 60 and date of retirement.

To take your classic pension at age 60 and continue in alpha, you would need to partially retire at that time. If you have already reduced hours at age 59, you would then need to do so again at age 60. That might push you in the direction of partially retiring at age 59 and taking all of your classic pension.

You should read about abatement, as that might well influence how many hours you do after partial retirement - many choose to set hours so as to avoid abatement, and often that leads to a 2.5 to 3 day week. It is likely that if you only reduce by 1 day per week you would suffer abatement if taking all of your classic pension. That leads to you effectively working only for your pension accrual, with no pay, for part of the week.

Don't think of it as a penalty, it is simply an actuarial reduction to reflect that it will be paid for longer. It is all actuarially neutral, so you end up getting pretty much the same amount overall whether you take it at 61 or 67 (assuming you live the expected length of time, etc).

Universidad

Note that your 2026 Annual Benefit Statement is due by 31st August.

Normally I'd consider that to be helpful additional information, but in the current circumstances it feels a bit tongue-in-cheek.

horsewithnoname

https://forums.moneysavingexpert.com/discussion/6675704/civil-service-pension-better-to-go-part-time-or-partially-retire

most IFAs don’t have a clue about CS pensions and won’t advise on them (or so I’m told). Once you take your classic pension it will increase with Sept CPI as opposed to pay awards, so though the last two pay awards have been a bit better than the previous ones, it’s something to think about. I took partial retirement at 58 and my pension is more than if I’d waited till 60 (“thanks” Liz Truss).
abatement is something to consider - if your post PR gross income exceeds your final 12 months gross salary then your pension is restricted by the excess.
Unless you have recently had promotions then alpha is very likely to be better than classic, even with higher actuarial reduction. Alpha isn’t subject to abatement so you can PR again with your alpha if you only take classic this time.
Ulimately you can only do what is best for you, because unless you know future inflation and pay award rates and government policy and the date you will die, you can’t ever be accurate, so do what suits you and makes you happy.